Solution for Financial Crises

It is funny that people should talk about solution of the financial crisis that seem to be the only thing to talk about in the recent past because the worst that they do is panic and the best they do is to come up with ideas that all the information on all credit cards should be erased through a magnetar. The world saw something that nearly none saw before. The Great Depression of 2008. The financial crisis that shook the world. The rest might have had a childish taste when it occurred in 1929. The crisis is unfathomable, the solution indefinite. One must know that to learn about a crisis we must indulge ourselves in the tyranny of the alternative practices that human behavior seldom permits.

It is always seen that the panic is the most obvious reaction when there is certain news about a financial crisis. While this is the most obvious, it also is the most problematic and therefore a hindrance to find out an actual solution. There are so many undoing of the people around the world that one can only but say that there is probably no proper foreseeing of the future.

The problems are very simple and yet so complicated. The banks at the times of boom keep on withdrawing money and the people in boom keep on enjoying the effects and spend money. When banks are in their happy times, care less about the lending rates and the cash reserve ratios that are actually in process. One has to learn to be moderate in approach. After all, people do not live for a few years whereby he tries to enjoy everything a person can and has to think of the future. The people who defaulted with the realty developers and thereby with the banks could never perceive that that would indeed harm them. The Lehman Brothers, AIG, Morgan Stanley all faced the problem of lending large sums of money to the developers who defaulted leading to the complete bankruptcy o the first and the near bankruptcy of the later two. It is to be noticed that if the banks made proper investigations of the future effects the crisis could have been averted. The people too cut on their spending leading to a jam in the financial money low in the market leading to the fall of share prices and the market economy. The banks now are cutting down on lending rates and the cash reserve ratios offered by the central banks are increasing. All these are feasible solutions of the financial crisis that occur. The banks to should initiate the money making process either by imposing heavy taxation as was done in Japan a few years earlier or should increase the spending.

But what comes of all this is the fact that the basic problem that people and the banks face is the stress on the short run capital flow around the financial market and not the long term implications. The solution that can be best offered is to take hints from the crisis that is occurring around the world and make long term preparations for the next debacle.